Fitch Ratings has upgraded the rating of Dominion Resources, Inc.'s
(DRI) remarketable junior subordinated notes due July 1, 2019 to 'BBB'
from 'BBB-'. The upgrade is prompted by the removal of the interest
deferral feature in connection with the remarketing of the notes. Under
Fitch's rating criteria, junior subordinated debt is typically rated one
notch below the Issuer Default Rating (IDR) while those with an interest
deferral feature are considered more equity like and rated two notches
below the IDR.

The remarketable junior subordinated notes were originally issued as a
component of DRI's 2013 Series B equity units consisting of the
subordinated notes and a forward purchase contract obligating the holder
to purchase DRI shares on July 1, 2016. The notes were pledged as
security for the holder's obligation to purchase the DRI common stock.
Proceeds from the remarketing will be used to settle the holders forward
purchase obligation and ultimately used by DRI to repay debt issued to
fund capital expenditures or for other corporate purposes.

The 'BBB-' rating on three issues of long-dated enhanced junior
subordinated notes with maturities ranging between 38 and 40 years that
retain the deferral provision are unaffected by this rating action.
Similarly, the 'BBB-' rating on the remarketable junior subordinated
notes that were originally issued as a component of the 2014 equity
units and will be remarketed in 2017 is also unchanged.

KEY RATING DRIVERS

Diversified Asset Base: DRI owns a large portfolio of utility, power,
midstream, and other energy assets. The business risk and financial
profile is anchored in Virginia Electric and Power Co. (VEPCo; IDR rated
'A-'), a large integrated electric utility based in Virginia that
represents approximately two thirds of consolidated earnings and cash
flows. Two regulated gas distribution companies, two FERC-regulated
interstate gas pipelines, a liquefied natural gas (LNG) import facility
(Cove Point), and a merchant generation fleet round out the portfolio.
Fitch considers DRI's business risk profile to be elevated for the next
few years reflecting the construction risks associated with various
large scale projects including the Cove Point LNG export facility. Cove
Point development costs are estimated by DRI management to total $3.4
billion to $3.8 billion without financing costs, with commercial
operation expected in late 2017.

Pending Questar Acquisition: Based on the expected financing plan and
Questar Corp's strong financial position, Fitch expects consolidated
credit metrics to be moderately weaker than previously expected, but to
remain supportive of existing ratings. Fitch still expects DRI's
financial profile to begin to strengthen over the next several years as
the company realizes anticipated earnings contributions from projects
currently under construction, including the Cove Point export facility
and to remain supportive of the existing ratings. Fitch expects DRI's
ratio of lease adjusted debt/funds from operations (FFO) to remain below
5.0x.

Cash Flow Subordination: The subordination of cash flows through drop
downs into DM is a credit concern that grows over time. The concern is
mitigated by DRI's ownership of the general partnership and significant
portion of the limited partnership units. In addition, the planned drop
down of Questar pipeline assets will delay the previously planned drop
down of the Blue Racer joint venture assets to 2020 from 2017. The
subordination concern would heighten if DRI were to significantly reduce
its ownership in DM without reducing DRI debt or raise significant debt
at DM (DM is currently debt free).

Cove Point: The expected commercial operation of the Cove Point LNG
facility in late 2017 should enhance earnings and cash flow and lower
capex. Capacity is fully subscribed to investment grade counterparties
under 20 year agreements and DRI takes no commodity or volumetric risks
during the contract term.

Financial Profile: Consolidated leverage is high for the rating level,
but should gradually improve over the next several years as DRI realizes
anticipated earnings contributions from projects currently under
construction, including the Cove Point export facility. Even with the
acquisition financing, Fitch expects debt/EBITDAR to fall below 4.5x in
2018 and FFO leverage to remain below 5.0x.

Parent Level Debt: The percentage of parent level debt is high and
reflects the prior centralized funding strategy for all subsidiaries and
operations, except VEPCO. Parent long-term debt totals approximately
$12.7 billion or approximately 50% of consolidated long-term debt (as of
Dec. 31, 2015). Parent debt is supported by dividends from VEPCo and
DomGas, the Blue Racer joint venture, the 4,000MW merchant generation
fleet, Cove Point and other investments.

KEY ASSUMPTIONS

--DRI completes the drop down of Questar's pipeline business in a timely
fashion and uses proceeds to pay down acquisition debt;

--Organic growth capex will remain elevated through 2017 coinciding with
the completion of Cove Point;

--VEPCo's base rates remain frozen through 2019;

--Timely execution of capex plan.

RATING SENSITIVITIES

Positive Rating Action: A positive rating action is not expected at this
time given the large capital investment plan and high consolidated
leverage. However, ratings could be upgraded if adjusted debt to EBITDAR
falls below 3.5x and FFO lease-adjusted leverage below 4.25x on a
sustainable basis.

Negative Rating Action: Ratings could be downgraded if there are
substantial cost overruns or delays in completing the Cove Point LNG
export project. Weaker earnings, lower dividends from VEPCo, or
FFO-adjusted leverage above 5.0x on a sustained basis could also lead to
negative rating action. The inability to reduce acquisition debt with
equity proceeds from asset drop downs could also adversely affect
ratings.

LIQUIDITY

Liquidity is considered sufficient supported by operating cash flow and
two separate revolving credit facilities aggregating $5.5 billion. The
credit facility supports commercial paper borrowings and up to $1.5
billion of letters of credit. The credit facilities expire in April 2019.

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IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE
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CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH
WEBSITE.

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